Main elements to make any trading strategy profitable

2015

Main Elements To Make Any Trading Strategy Profitable

FX WORLD LTD

Main Elements To Make Any Trading Strategy Profitable As the trading has expanded globally, so are the trading strategies to guide the traders in right direction and provide them with results that are more profitable. Let us now talk about a good trading strategy, that is, a profitable, beneficial, and more productive trading strategy.

What separates a good trading strategy from the ordinary ones?

First, you need to know the basic concept about the trading strategies, that is, the main purpose behind developing and using Trading strategies, well in simple words, trading systems require a predetermined and calculated set of rules and steps in order to function according to the desired and expected results, that is buys and sales in the trading market. Every profitable trading strategy has certain elements in it that are common amongst almost every good trading strategy.

There are two very important traits to every trading strategy, which are complexity and simplicity.

Remember, a good trading strategy is never too easy/simple or too complex/ difficult. Now you must be wondering that what I exactly mean by simple and complex, well the answer to that can be understood from these facts:

COMPLEX STRATEGY

   

Complex strategies are comparatively more sensitive to changes and therefore they require much more attention and modifications compared to simple strategy.

It does not usually perform accordingly with the data provided because of its high sensitivity to every small change.

It cannot be used for long periods because it always needs to be modified.

They are also very much ideal in many cases because the trading market is not so simple, it is quite complex.

Now moving towards simple strategies:   

It requires less modification and constant attention Due to its low sensitivity to changes, it can therefore be used for longer periods However, it is not very effective in the complex market situations because it lacks the ability to resolve complicated data.

A profitable trading strategy always focuses on both entries and exits in the trading market. Usually traders focus on one point more than the other one because they are misguided by their trading strategies so it is very important that a trading strategy should be capable enough to properly guide you in both the cases.

A profitable trading strategy also has one more important characteristic and that is ability to make reasonable assumptions about cost. Costs in the trading business are based on fees, profits and slippage. Slippage in simple words is actually the difference between the price at the time of filling of the order and the order price itself. A reasonable approximation for slippage is based on the type of order and on the market. A good trading strategy focuses on providing proper amount of slippage.

These were just some of the elements that a profitable strategy should have, remember that if a strategy provides you profit consistently without requiring too much of modifications then it is probably a good strategy for you to use in the trading market.